Fixed deposits are a vital instrument of short-term and long-term investment, which is also one of the most important ways to build a strong financial portfolio. The primary reasons for the popularity of regular fixed deposits are their safety, guarantee to provide fixed returns, and flexibility.
People save their hard-earned income in fixed deposits, as these are not affected by internal or external changes or performances. Let us learn how you can easily accumulate a bulk long-term investment portfolio by investing in Fixed Deposits (FD).
What is a Fixed Deposit?
Fixed deposits are offered by banks, non-banking financial institutions, post offices, and large corporations. You can invest a certain amount of money for a fixed tenure at a rate of interest that is predetermined, and that varies from one organisation to another.
The returns are much higher than savings accounts, there is no fixed deposit maximum amount, and you can conveniently open an FD account in a day.
Why Should You Invest in Fixed Deposits?
Let us see how fixed deposits can enhance your investment portfolio.
Easy and Convenient
You can open regular fixed deposits with basic documents and deposit the initial amount. It’s just a matter of a few minutes.
You can open a term deposit online and offline.
High Rates of Interest
You get the benefit of high-interest rates as compared to savings accounts.
The rate offered to you at the beginning of the term remains the same throughout the term, irrespective of any change in the economy or bank policy.
Benefits of a Compounding Interest
The interest earned on your principal amount is added to the lump sum each year, and you get the advantage of earning interest on interest.
This is the power of compounding, which can be thoroughly enjoyed by opening an FD account.
Fixed deposits are not market-linked investment instruments, and there is no deviation in the interest amount.
Term deposits are not affected by inflation, recession, or any other market-related factor, which means it offers a guaranteed return on investments at a fixed interest rate.
You can use a fixed deposit interest calculator to understand the amount of corpus you can build.
Beneficial for Senior Citizens
Senior citizens get the advantage of a 0.50% higher interest. They can opt for periodical withdrawals to help them in their retirement years.
You can choose monthly/quarterly/lump sum payouts on your term deposits.
Low Minimum Investment
You can open an FD with a minimum of INR 1000. There is no fixed deposit maximum amount, and you can save as much as you can.
High Liquidity and Flexibility
For any financial emergency, you can opt for a premature withdrawal, which may not generate the promised interest amount but will help you with ready finances. You can opt for periodical withdrawals and even auto-renewals
Access to a credit card or overdraft
Besides coming to your rescue in financial emergencies, FDs also give you the leverage to take a credit card or overdraft on 90 – 95% of the total value of the investment to cater to your financial needs.
Builds a Well-Balanced Portfolio
While you are saving in other risk-oriented means, a fixed deposit investment balances your portfolio and adds an element of security, stability, and fixed returns.
Suitable for Short-Term and Long-Term Goals
Investing in regular fixed deposits is one of the wisest decisions, as you can decide the tenure of your deposits according to your goals.
From a minimum of 7 days to 10 years, you can choose the period you want to invest in.
Shields Against Externalities
Economic or RBI-mandated policy changes externalities do not impact your FDs, as your principal amount plus earned interest is guaranteed at maturity.
You benefit from tax deductions under section 80C of the Income Tax Act, 1961. You must open a fixed deposit for five years and get an exemption of up to Rs 10,000 in one financial year.
Some of them also get exemptions up to INR 1.5 lakhs, U/S 80C of the Indian Income Tax Act, 1961.
Fixed Deposit Interest Rates Offered by RBL Bank
|FD Interest||Interest Rate for Senior Citizens|
|3.50% – 7.80%||4% – 8.30%|
Term deposits are not subject to any externalities or market risks. It is the simplest way to secure your savings, earn a strong ROI, and build a robust financial portfolio.
All you need is your Aadhar Card and PAN card to open a fixed deposit.
Choose your bank wisely and opt for one that offers the maximum rate of interest. It is one of the most convenient and safest forms of long-term investment that offers stability, flexibility, and convenience.